18th Dec 2006 07:02
Wichford plc18 December 2006 WICHFORD PLC Preliminary results Portfolio now worth £456 million - Increase of 71% Wichford PLC ("Wichford" or the "Group"), the property investment company, todayannounces its preliminary results for the year ended 30 September 2006. Highlights • Profit before tax for the year £9.9 million (2005: £2.4 million); • Net assets increased to £214.2 million (2005: £171.0 million); • 18 properties acquired during the year with an average yield of 6.45%. The Group has made a further six purchases since the year end including the acquisitions announced today; • At the year end Wichford owned 61 properties valued at approximately £456 million; • Recommended final dividend of 6.5p per share, making a total dividend for the year of 9.5p (2005: 9.0p); • Earnings per share of 10.18p (2005: 5.21p) Michael Sheehan, Chairman of Wichford, commented today: "This has been another busy year for the Group. We have extended our portfoliosignificantly and have bought wisely at an average yield of 6.45% and at yearend the properties owned by the Group were valued on a weighted average yield of6%. Our strategy remains clear, focused but also flexible and we will continueto grow the portfolio by selective acquisitions both in the UK and inContinental Europe." Enquiries: Wichford Jamie Hambro Tel: 0207 747 5678Philip Cooper Tel: 0207 495 7111Richard Britten-Long Tel: 0207 333 0044 Citigate Dewe Rogerson Tel: 020 7638 9571 George CazenoveHannah Seward CHAIRMAN'S STATEMENT I am pleased to announce the results for the year ended 30 September 2006.Profit after tax for the 12 months was £9.9 million and the net assets rose from£171.0 million at the start of the year to £214.2 million at 30 September 2006. The year was one of substantial progress. The portfolio owned by the Group hasgrown from £267 million to £456 million, an increase of 71%. During the year,three properties were sold for a total consideration of £14.7 million resultingin a net profit of £2.6 million. Earnings per share ("eps") were 10.18p. The Directors are recommending thepayment of a final dividend of 6.5p per share, which together with the interimdividend of 3p per share, makes a total dividend of 9.5p for the year. This isan increase of 5.6% over the dividend paid for the period ended 30 September2005 which was, however, a longer period of 15 months. The final dividend, ifapproved by Shareholders, will be paid on 19 February 2007 to Shareholders onthe Register at the close of business on 9 February 2007. Net assets per share at 30 September 2006 (before final dividend) were 220.0p,compared with 175.7p per share on the same date in 2005. This is an increase of25%. The Group has acquired a further 18 Government occupied properties at an averageyield of 6.45% and at 30 September 2006 owned 61 buildings. Annualised netrental income grew to £27.3 million (2005: £17.6 million). The Group continuedits policy of actively managing the portfolio and lease extensions werenegotiated on four properties. At the year end the properties owned by the Groupwere conservatively valued on a weighted average yield of 6.0% (2005: 6.2%). During the year, the Board reviewed the Group's investment strategy. Thisreassessment was caused by the continuing compression of property yields and therise in UK interest rates. As a result, the decision was taken to expand thegeographical area in which the Group will invest first to include Central Londonas stated in my interim results statement and now to be expanded further,following a detailed review, to include Continental Europe focusing on developedmarkets. The Directors believe that there may be attractive opportunities to acquirebuildings in Continental Europe, where the prospects for rental growth andcapital appreciation are as good as or better than in the UK. This can beachieved without sacrificing significant covenant quality. The Directors have considered the legislation contained in the Finance Act 2006and the regulations issued at the beginning of November by HMRC concerning theintroduction of UK Real Estate Investment Trusts ("REITs"). The Board presentlybelieves that Shareholders would not benefit from conversion to a REIT, and thatthe current status as an Isle of Man company gives considerable operationalflexibility. The Board intends to review periodically the option of conversionto a REIT. The Board has decided to seek authority from Shareholders to cancel £50 millionof the Company's Share Premium account, subject to court approval, in order toprovide further flexibility in the Group's financial structure. To this effect,an Extraordinary General Meeting will be held at 12.30 pm, after the conclusionof the Annual General Meeting, on 31 January 2007 at the Company's registeredoffice. The Group has acquired a further six properties since the year end. It isexpected that these acquisitions will increase the size of the portfolio by£41.7 million. Within the existing portfolio there are opportunities to enhancevalue by active management. The Board therefore views the Group's prospects forthe current year with cautious optimism. MICHAEL SHEEHAN Chairman 15 December 2006 CONSOLIDATED PROFIT & LOSS ACCOUNT FOR THE 24 June 2004 toYEAR ENDED 30 SEPTEMBER 2006 30 September 2006 2005 (restated) £'000 £'000 TURNOVER 24,163 15,968PROFIT ON SALE OF INVESTMENT PROPERTIES 2,567 1,785 ADMINISTRATIVE EXPENSES (4,964) (3,490) OPERATING PROFIT 21,766 14,263 Interest receivable 2,216 969Interest payable (14,000) (10,483)Exceptional cost of financial restructuring - (2,340) PROFIT ON ORDINARY ACTIVITIES BEFORE 9,982 2,409TAXATIONTaxation (73) (4) PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 9,909 2,405 Earnings per share (pence) - basic 10.18 5.21 CONSOLIDATED STATEMENT OF TOTAL RECOGNISED 24 June 2004 toGAINS & LOSSES FOR THE YEAR ENDED 30 30 SeptemberSEPTEMBER 2006 2006 2005 (restated) £'000 £'000 Profit on ordinary activities after taxation 9,909 2,405 Unrealised surplus on revaluation ofproperties 38,775 9,243 TOTAL GAINS AND LOSSES RELATING TO THEPERIOD 48,684 11,648 All activities are continuing. CONSOLIDATED BALANCE SHEET 2006 2005 (restated) £'000 £'000AS AT 30 SEPTEMBER 2006 FIXED ASSETS Tangible assets - investment properties 457,865 267,085 457,865 267,085CURRENT ASSETS Debtors 12,300 3,378 Cash at bank 17,312 90,112 29,612 93,490 CREDITORS - AMOUNTS FALLING DUE WITHIN ONE YEAR: (13,055) (9,206) NET CURRENT ASSETS 16,557 84,284 TOTAL ASSETS LESS CURRENT LIABILITIES 474,422 351,369 CREDITORS - AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR (260,263) (180,399) NET ASSETS 214,159 170,970 CAPITAL AND RESERVES Called up share capital 9,733 9,733 Share premium account 148,882 148,857 Revaluation reserve 48,018 9,243 Profit & loss account 7,526 3,137 EQUITY SHAREHOLDERS' FUNDS 214,159 170,970 NET ASSET VALUEBasic - pence per share 220.04 175.67After deducting dividends proposed and payable - pence per share 213.54 172.10 COMPANY BALANCE SHEETAS AT 30 SEPTEMBER 2006 2006 2005 (restated) £'000 £'000FIXED ASSETS Investments - - - - CURRENT ASSETS Debtors 175,032 169,009 Cash at bank 580 3,843 175,612 172,852 CREDITORS - AMOUNTS FALLING DUE WITHIN ONE YEAR (1,038) (5,920) NET CURRENT ASSETS 174,574 166,932 TOTAL ASSETS LESS CURRENT LIABILITIES 174,574 166,932 NET ASSETS 174,574 166,932 CAPITAL AND RESERVES Called up share capital 9,733 9,733 Share premium account 148,882 148,857 Profit & loss account 15,959 8,342 EQUITY SHAREHOLDERS' FUNDS 174,574 166,932 CONSOLIDATED CASH FLOW STATEMENTFor the year ended 30 September 2006 24 June 2004 to 30 September 2006 2005 £'000 £'000 NET CASH INFLOW FROM OPERATING ACTIVITIES 15,010 16,792 RETURN ON INVESTMENT AND SERVICING OFFINANCE Interest received 2,216 969 Interest paid (13,318) (8,577) NET CASH OUTFLOW FROM RETURN ON INVESTMENT (11,102) (7,608)AND SERVICING OF FINANCE TAXATION PAID (73) - CAPITAL EXPENDITURE Payments to acquire investment properties (164,105) (125,882) Receipts on sale of investment properties 14,667 17,137 NET CASH OUTFLOW FOR CAPITAL EXPENDITURE (149,438) (108,745) ACQUISITIONS AND DISPOSALS Net cash inflow on acquisitions - (4,179) EQUITY DIVIDENDS PAID (6,404) - NET CASH OUTFLOW BEFORE FINANCING (152,007) (103,740) FINANCING Share issue expense adjustment 25 - Ordinary shares issued (net of expenses) - 125,960 Increase in debt 79,182 67,892 NET CASH INFLOW FROM FINANCING 79,207 193,852 (DECREASE)/INCREASE IN CASH (72,800) 90,112 NOTES TO THE FINANCIAL STATEMENTS 1 ACCOUNTING POLICIES The principal accounting policies are summarised below. They have all beenapplied consistently throughout the year. Basis of accounting The financial information has been prepared under the historical cost conventionand in accordance with applicable Isle of Man law and United Kingdom accountingstandards. Basis of consolidation The Group's financial statements consolidate the accounts of the Company and itssubsidiary undertakings up to 30 September 2006. The results of a subsidiaryundertaking acquired during the year are included from the date of acquisition.Profits or losses on intra-group transactions are eliminated in full. Onacquisition of a subsidiary, all of the subsidiary's identifiable assets andliabilities which exist at the date of acquisition are recorded at their fairvalues at that date. As permitted by Section 3 of the Companies Act 1982 (Isle of Man) the Companyhas not presented its own income statement. The amount of the Company's profitfor the financial year dealt with in the financial statements of the Group is£13,137,000 (2005: £7,610,000). Prior Period Restatement FRS 21 "Events after the balance sheet date" is applicable for the first time infull for the year ended 30 September 2006. The impact of this, which is solelythe presentation of the dividends relating to the period ended 30 September2005, has been reflected on the balance sheets and in Note 10 of these financialstatements. Investment properties Investment properties are initially recognised at cost, being the fair value ofconsideration given, including acquisition costs associated with the purchase ofthe investment property. All the Group's properties are held for long-term investment. After initialrecognition, investment properties are carried at open market value and areaccounted for in accordance with SSAP19, 'Accounting for Investment Properties'as follows: (i) investment properties are revalued semi-annually. The surplus or deficit onrevaluation is transferred to the Revaluation Reserve unless a deficit beloworiginal cost, or its reversal, on an individual investment property is expectedto be permanent, in which case it is recognised in the profit and loss accountfor the period; and (ii) no depreciation is provided in respect of freehold/feuhold and longleasehold properties. The Directors believe that the policy of not providingdepreciation is necessary in order to give a true and fair view since thecurrent value of investment properties and changes to that value, are of primaryimportance rather than a calculation of systematic depreciation. Depreciation isonly one of many factors reflected in the semi-annual valuation and the amountwhich might otherwise have been included cannot be separately identified orquantified. Property disposals Profits or losses on disposal of a property are recognised upon the completionof a sale. Recognition of income Rental income under operating leases is included in these financial statementson a receivable basis. Interest receivable on short term deposits is accounted for on an accrualsbasis. Insurance premiums recharged to tenants are not reflected in either income orexpense. Expenses Expenses are incurred by the Group in relation to the establishment,constitution, administration and business of the Group. Costs incurred on thepurchase of investment properties are capitalised as part of the cost ofinvestment. Costs relating to acquisitions in progress are retained in thebalance sheet and included in the cost of acquisition on completion. Costsincurred on aborted acquisitions are written off to the profit and loss account. Loan issue costs In accordance with FRS 4 'Capital Instruments', loans are included initially inthe Financial Statements at cost, being the fair value of the considerationreceived, net of issue costs relating to the borrowing. After initialrecognition, the loans are measured at amortised cost using the effectiveinterest method. The amortised cost is calculated by taking into account anyissue costs, and any discount or premium on settlement. Derivative instruments The Group uses interest rate derivatives to hedge interest rate exposures on theGroup's borrowings. The Group's criteria for adopting hedge accounting for interest rate swaps are: (i) the derivative instrument must be related to a liability at inception; and (ii) it must reduce the interest rate risk on the related liability by converting a variable to a fixed rate. The Group's criteria for adopting hedge accounting for interest rate caps are: (i) the derivative must be related to expected interest rate exposures based on current and anticipated borrowing capabilities; and (ii) it must reduce interest rate risk on such future borrowings as to limit the exposure to increases in interest rates. Interest differentials are recognised by accruing the net interest payable. Thecost of interest rate hedges is recorded in the balance sheet against theassociated borrowing and is taken to the profit and loss account over the lifeof the hedging relationship. If the hedge is terminated early, the gain/loss isrecognised on a basis which matches the timing and accounting treatment of thehedged item. Taxation Current tax, including UK corporation tax, UK income tax and foreign tax, isprovided at amounts expected to be paid or recovered using the tax rates andlaws that have been enacted or substantially enacted by the balance sheet date. Deferred tax is recognised in respect of all timing differences that haveoriginated but not reversed at the balance sheet date. Where transactions orevents have occurred at that date that will result in an obligation to pay more,or a right to pay less or receive more, tax, with the following exceptions: • Provision is made for tax on gains from the revaluation (and similar fair value adjustments) of fixed assets, or gains on disposal of fixed assets that have been rolled over into replacement assets, only to the extent that, at the balance sheet date, there is a binding agreement to dispose of the assets concerned. However, no provision is made where, on the basis of all available evidence at the balance sheet date, it is more likely than not that the taxable gain will be rolled over into replacement assets and charged to tax only where the replacement assets are sold. • Deferred tax assets are recognised only to the extent that the Directors consider that it is more likely than not that there will be suitable taxable profits from which the underlying timing differences can be deducted. Where required deferred tax is provided, without discounting, under theliability method at the tax rates that are expected to apply in the periods inwhich timing differences reverse, based on tax rates and laws enacted orsubstantively enacted at the balance sheet date. SHARE BASED PAYMENTS As part of the contract with the Property Adviser, a performance fee is payableand this is to be satisfied by the issuance of new shares in the Company. Thisperformance fee is related to the underlying return to Shareholders, based onthe share price and dividends paid. The resulting performance fee for aparticular performance period will be settled by the issuance of shares to theProperty Adviser subject to certain vesting conditions at the end of thesubsequent two years. The performance fee is charged to the profit and loss account over the vestingperiod in accordance with UITF 17 and FRS 20. Until the issuance of any sharesunder this contract, and in accordance with guidance issued by the Institute ofChartered Accountants of England and Wales, the charge to profit and lossaccount is added back to distributable reserves, as it does not result in cashleaving the Company. On the issuance of any shares under this contract, the full market value of theshares issued will be charged to the Company's distributable reserves. 2. TURNOVER 28 June 2004 to 2006 30 September 2005 £'000 £'000 Rental income 24,104 15,968Other income 59 -Total 24,163 15,968 3. OPERATING PROFIT IS STATED AFTER CHARGING: 28 June 2004 to 2006 30 September 2005 £'000 £'000 Property Advisor's Fees - for advisory fees 2,535 1,504 - for accrued performance fees 884 732Property Manager's Fees 142 105Auditors' remuneration - for interim review 25 15 - for final audit 109 79 - for review of tax provision 20 15 - for tax compliance work 60 118Legal Fees 275 339 In addition to the fees shown above as the Auditors' remuneration, RSM Robson Rhodes also charged£129,000 (2005: £280,000) for due diligence and advisory services. These fees have been eithercapitalised as part of the cost of acquiring properties or charged to the Share Premium account asan expense of raising additional share capital. The total fees payable to the Auditor in the periodwere £343,000 (2005: £507,000). 4. NET INTEREST PAYABLE 28 June 2004 to 2006 30 September 2005 £'000 £'000 Interest receivable 2,216 969Interest payable (14,000) (10,483) Net interest payable (11,784) (9,514) The interest payable is analysed as: Bank term loan interest (13,288) (9,493)Bank swap interest - (41)Non-utilisation fees - (44)Early repayment fees - (27)Amortisation of loan arrangement fees (682) (859)Other (30) (19) (14,000) (10,483) 5. EARNINGS PER SHARE Before Exceptional Exceptional Refinancing Costs Refinancing Costs Total Current Year Profit for the year (£000) 9,909 - 9,909 Weighted average number of shares in issue in period (000's) 97,326 - 97,326 Basic - Earnings per share (pence) - As at 30 September 2006 10.18 10.18 Before Exceptional Exceptional Refinancing Costs Refinancing Costs Total Previous Period Profit for the period (£000) 4,745 (2,340) 2,405 Weighted average number of shares in issue in period (000's) 46,144 - 46,144 Basic - Earnings per share (pence) - As at 30 September 2005 10.28 5.21 6. TANGIBLE FIXED ASSETS - INVESTMENT PROPERTIES Group Current Year Freehold/Feuhold Freehold and Long Total Long Leasehold Leasehold £'000 £'000 £'000 £'000 As at 1 October 2005 186,120 26,420 54,545 267,085Additions 115,117 - 46,883 162,000Disposals (12,100) - - (12,100)Revaluation in period 28,631 1,144 9,000 38,775 Investment Properties as at 30 September 2006 317,768 27,564 110,428 455,760 Payment on account for asset in course of construction - 2,105 - 2,105 Total tangible fixed assets as at 30 September 2006 317,768 29,669 110,428 457,865 Previous Period Freehold/Feuhold Freehold and Long Long Leasehold Leasehold Total £'000 £'000 £'000 £'000 Opening balance - - - -Additions 195,609 25,683 51,902 273,194Disposals (15,352) - - (15,352)Revaluation in period 5,863 737 2,643 9,243 Investment Properties as at 30 September 2005 186,120 26,420 54,545 267,085 The historical cost to the Group of its investment properties as at 30 September2006 was £409,846,500 (2005: £257,842,000) All the Group's investment properties were externally valued as at 30 September2006 on the basis of open market value by professionally qualified valuers inaccordance with the Appraisal and Valuation Standards of the Royal Institutionof Chartered Surveyors. The Group's valuer is Atisreal Limited. 7. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR Group 2006 2005 £'000 £'000 Bank loans 264,286 184,286Deferred finance costs (4,023) (3,887) 260,263 180,399 8. RECONCILIATION OF SHAREHOLDERS' FUNDS Group Company 2006 2005 2006 2005 £'000 £'000 £'000 £'000 Opening balance 170,970 - 166,932 - Increase in revaluation reserve 38,775 9,243 - - Profit for the period 9,909 2,405 13,137 7,610 Dividends paid (6,404) - (6,404) - Credit relating to Performance Fee ofProperty Adviser 884 732 884 732 Gross proceeds from issue of Ordinary Shares - 163,632 - 163,632 Share issue costs - (5,042) - (5,042) Share issue expense adjustment 25 - 25 - As at 30 September 214,159 170,970 174,574 166,932 9. NET ASSET VALUE PER SHARE 2006 2005 £'000 £'000 Net Assets - £'000 214,159 170,970 Number of Shares - 000 97,326 97,327 Basic Net Asset Value 220.04 175.67per Share - pence 10. DIVIDEND 28 June 2004 to 30 September 2006 2005 £'000 £'000 Final dividend for 2005 - 9 pence per share 3,471 -Interim dividend for 2006 - 3 pence per share 2,933 - Total 6,404 - The Directors are proposing a final dividend for the year of 6.5p per share (amounting to£6,326,000). Shareholders will be asked to approve this dividend at the forthcoming Annual GeneralMeeting and, if approved, the dividend will be paid on 19 February 2007 to all those Shareholderson the register at the close of business on 9 February 2007. 11. POST BALANCE SHEET DATE EVENTS In anticipation of future property purchases since the 30 September 2006 theGroup has increased its long term loans by £50 million, under the same facilityas existed at 30 September 2006, in anticipation of future property purchases.This interest rate risk on this increased borrowing has been hedged by takingout an interest swap at 5.2%. The Group has thus maintained its position offixing the interest rate on all borrowings. The Group has also completed the purchase of two properties costing £17,026,000on which contracts had been exchanged prior to the 30 September 2006. A furtherfour properties costing £24.9 million have been acquired since the financialyear end. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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